Written by Anna Helman
Whether you are going to buy or sell a property, you will most likely have to deal with appraisals. Appraisals are crucial because they state the value of the property at the current market value, which can influence loan amounts, finances, and the property’s sale value. Receiving an accurate appraisal can be difficult enough, yet horse properties present even more challenges. Establishing a complete appraisal requires many steps along with in-depth research. So in today’s blog, we will only discuss the factors of a property description that influence an appraisal.
When evaluating a property in order to establish an accurate description, the appraiser must take into account the market area, the individual property, and the comparable properties.
Market Area
The Economy. The current wellbeing of the local economy can influence an appraisal. For example, if your local economy is going through a recession or has an increasing unemployment rate, then you are more likely to receive a lower appraisal because buyers are less likely to have the funds to pay back loans.
The Community. Another factor that plays into the market area is the surrounding community. In a highly populated equestrian area, an equestrian facility has a greater value. There is a greater demand for specific amenities and facilities so often a property value is much higher than if you were in an area with very few horses.
Individual Property
The Facility. This description includes the buildings and improvements to the facility, along with the quality and maintenance of these structures. The appraisal value of the buildings and improvements depends on the demand for equestrian real estate. Issues arise when improvements are made to a property that has very few perspective buyers. Often these improvements do not raise the appraisal value and leave owners disappointed.
The Location. An ideal location, perhaps close to a suburb or within an agricultural reserve, adds exponential value to an appraisal. A good location for a horse property is convenient to basic necessities, easily accessible by roads, and located in a quiet setting. Lacking these property qualities could deter prospective buyers, boarders, and riding students.
Sales of Comparable Properties
Comparable properties are other properties that have been sold in similar locations and with similar features to the appraised property. These comparable properties offer insight into the value of similar homes within the current real estate market.
The Size. If a property that is being appraised is too large, then it is often hard to find other horse facilities that compare. For example, it going to be a lot more difficult to find a wide variety of 90-stall show barns that recently sold in your area, compared to 4-stall private barns. At times, this can mean that the larger properties have greater opportunities for inaccuracy in their appraisals.
The Area. Finally, if you are in an area with very few horse properties, the likelihood of finding a comparable property dwindles. It is then extremely difficult to base an appraisal off another property’s location, leaving greater room for error as well.
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